Banks cap overseas spend on cards to check frauds

Banks cap overseas spend on cards to check frauds

Your ability to spend overseas using debit or credit card will now be restricted as banks have started putting international spending limits on cards. The move is aimed to reduce the scope of frauds as electronic payment systems are becoming vulnerable to misuse.

In the last couple weeks, a few foreign and domestic banks have sent text messages or e-mails to their card customers informing them that a limit is now being placed on their card for international transactions.

The limit, however, will only be applicable for overseas transactions and will not impact any spending done within India. Customers are also allowed to revise – increase or decrease – this cap by contacting their respective banks.

"So far, there were two types of limits on credit cards – the overall credit limit and the cash limit. Now, additionally there will be an international spend limit. But all these limits will be a subset of the customer's overall credit limit. The overseas spend limit will be less than or equal to the overall credit limit of the customer," a senior banker in charge of retail lending business of a private sector bank said requesting anonymity.

Banks cap overseas spend on cards to check frauds

Bankers said that the international spend limit has been introduced on both debit and credit cards to minimise the risk of cyber-attacks and frauds. In the last few years, many customers have claimed that their credit or debit card was misused immediately after they returned from an overseas trip.

In February, 2013 the Reserve Bank of India (RBI), as part of its security and risk mitigation measures for electronic payment transactions, had directed banks that all new debit and credit cards must be issued only for domestic usage unless international use is specifically sought by the customers. It also said that banks must issue only EMV chip card to their customers if they want to use it abroad.

Banks were also directed to convert all existing magnetic stripe cards to EMV chip cards for all customers who have used their cards internationally at least once.

Banks cap overseas spend on cards to check frauds

In the same circular, RBI had said: "All the active magnetic stripe international cards issued by banks should have threshold limit for international usage. The threshold should be determined by the banks based on the risk profile of the customer and accepted by the customer."

"RBI has not specified the overseas spend limit. It is decided by us depending on the risk profile of the customer. We try and ensure that the limit is reasonable. The customer can also change this limit by sending us a request," said a senior executive with a foreign bank in India.

According to bankers, initially RBI wanted banks to put the cap on international spending by June 30, 2013. However, later the deadline was extended because of the large number of cards in circulation. As per RBI data, there were 18.46 million credit cards and 362.34 million debit cards in India at the end of August, 2013.